The hydroelectric plant has marked the price of electricity in 51% of the hours of 2021

Generation from large hydroelectric plants tends to set the price in the wholesale market, being more expensive than gas.

The Riba-Toja hydroelectric power station, in Tarragona.

They call it the ‘opportunity cost‘and the data confirms it. With one day to go to the end of 2021, the large hydroelectricAs it is manageable, that is, it can open or close gates to release water at its convenience, it has marked almost 51% of the hours every month of the year.

This is confirmed Francisco Valverde, expert in the electricity sector and head of the renewables and energy efficiency area of ​​the Menta Energía group. “A About to end the year, this is the panorama of marginal sources. The great hydro, as always is the queen, regardless of the month you look at, accounts for almost 51% of the hours. The next one that follows is renewables / cogeneration with 21% and cycles with 15% ”.

Hours that sources mark price

Hours that sources mark price
Francisco Valverde

Normally, it is always the water that sets the price most of the time. For all purposes, the price of water is the same as that of gas, because it refers to the price at which the gas is. If gas is more expensive, water is more expensive. “If gas is cheap, water is cheap, but wait for the gas to set the price to enter it later,” adds Valverde.

“December is not an exception either, and water sets the price in 47% of the hours that we have this month. The most expensive marginal sources, as always, are pumping, hydroelectric and combined cycles (gas). The cheapest, thermal power plants (coal) and nuclear power plants (only in 7 hours they have set a price, which is not representative of anything) and cogeneration and renewables ”.

Water at gas prices

“Large hydroelectric plants are doing what any storage system would do. Take the opportunity to sell to the highest bidder ”, say expert sources from the electricity sector.

And they add: “In the future, when the price in the wholesale market skyrockets, storage systems such as batteries and other technologies will be profitable to sell their energy, and no one will see it strange.”

Although with pumping the system of using storable water is greater, With large reservoirs, these types of plants have the possibility of offering energy at any time they want. In this way, income can be maximized taking into account the dammed water, the rain forecasts and the future electricity sales price forecasts.

How does the pool

The price of electricity is negotiates through the known as pool or electricity market. It works since 1998 and in it supply and demand marry. The highest price paid for the latest technology is the one that all those who sell their energy will receive within 24 hours. That is why it is called a marginal market.

First, Red Eléctrica (REE) makes an estimate of the electricity demand that will exist in the whole of Spain. And then in the market is when the producers present their electricity offers at a certain price, evaluated in € / MWh.

But that price is not the one charged in the final invoice that reaches consumers. It is only a part, included in the energy term, in addition to other items, and that accounts for around 35% of the total receipt.

Another part is the power term that is fixed, and that depends on the contracted power of each consumer. And finally, a 5.11% Electricity Tax (IEE), meter rent and 21% VAT are added.

Wind power lowers the price

Flour from another sack is the wind. Your participation in the mix serves to lower the final price. It is what has happened in the days of Christmas, even sinking it to the 2.67 euros / MWh between three and seven in the morning of December 26. Figures that, until a year ago, seemed normal but that, in recent months, the escalation of the gas market in Europe has made it impossible.

But it’s not enough. Because, so far this year, wind power is the main generation technology of the peninsular electricity system, reaching a share of 24% of the total, 1.7 percentage points more than in the same period of the previous year. But what sets the price are the last to enter, hydroelectric or gas.

Hours in which technologies set price

Hours in which technologies set price
Francisco Valverde

And the wind energy production broke a new record on Wednesday, December 29, when it covered, at 3.03 am, the 83.6% of the instantaneous demand of the peninsular electricity system, with a generation power of 16,996 megawatts (MW), according to data from Red Eléctrica de España (REE).

During that day, this technology was responsible for more than half (50.2%) of the peninsular generation structure, which contributed significantly to the renewable contingent having a 65.5% share of the peninsular ‘mix’, according to provisional data.